The Association of Ghana Industries (AGI) has said it will not interfere in the work of the Bank of Ghana (BoG) or shield any of its members found to have engaged in any irregularities regarding the collapse of seven local banks.
It also urged the public not to lose confidence in local banks or generalise the development, but rather continue to do business with the remaining local banks.
â€œEven though this development may undermine the integrity of local banks, AGI believes there are similar local banks that measure up to expectation and must be encouraged to keep to standard,â€ the President of AGI, Dr Yaw Adu Gyamfi, said at a news conference in Accra last Thursday.
The association presented the second quarter Business Barometer Report for 2018 and discussed issues confronting businesses in the country at the conference.
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On Wednesday, August 1 this year, the BoG revoked the licences of five banks and subsequently merged them into a new bank â€” the Consolidated Bank Ghana Limited â€” to be headed by Mr Nii Amanor Dodoo of KPMG.
The entities â€” the uniBank, the Royal Bank, the Sovereign Bank, the Construction Bank and the BEIGE Bank â€” were found to have committed various regulatory and financial breaches that made them insolvent and unfit to continue operations.
In August last year, the UT and Capital banks suffered similar fates after they were found to have been insolvent.
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Throwing more light on the position of the association on the collapse of the banks, Dr Gyamfi said the association was saddened by the collapse of the seven local banks because the issues that caused the collapse could have been avoided.
â€œWeak corporate governance structures and the lack of adherence to the BoGâ€™s regulations as reported to be root causes for the collapse were avoidable,â€ he said.
However, Dr Gyamfi commended the BoG for the ongoing reforms in the banking sector to streamline operations to forestall any future insolvency of other local banks and expressed the hope that the reforms would ultimately lead to a fall in lending rates.
Presenting the second quarter report, the Chief Executive Officer of AGI, Mr Seth Twum Akwaboah, said the associationâ€™s business barometer conducted for the period of April to June this year indicated that there was a surge in business confidence.
He attributed the improvement to the reduction of electricity tariff which impacted positively on many businesses.
Mr Akwaboah also mentioned that the depreciation of the countryâ€™s currency against the worldâ€™s major trading currencies was affecting businesses.
â€œAGI is urging the government to quickly institute corrective measures to prevent further erosion of the gains made in quarter one,â€ he stated.
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Mr Akwaboah added that businesses came under intense pressure as a result of the depreciation of the cedi and the speculations about new taxes emerging from the mid-year budget review negatively impacted business confidence.
He also bemoaned the influx of imports, saying that issue continued to pose huge challenges to the growth of industries in the country.
Raising issues with the new straight levy regime, Mr Akwaboah said the current regime as introduced in the mid-year budget review, where manufacturers could only claim 12.5 per cent of Value Added Tax (VAT), leaving five per cent as cost burden passed on to consumers was a serious concern to businesses.
â€œThis makes manufacturers less competitive. The three per cent VAT Flat Rate Scheme (VFRS) operators (retailers/traders) will not suffer such unclaimed VAT ( five per cent) under this new straight VAT regime,â€ he indicated.
In addition, Mr Akwaboah said AGI would request for a monthâ€™s grace period to allow businesses to align their system or books to the new straight levy regime.